By San José, Costa Rica — A new report reveals a significant shift in Costa Rica’s housing landscape, with renting becoming increasingly prevalent while financed homeownership declines. According to the “Balance and Trends of the Housing Sector: Advances, Obstacles, and Challenges 2024” report, released on Monday, August 25th, by the Federated College of Engineers and Architects (CFIA) and the University of Costa Rica’s (UCR) Postgraduate Program in Architecture, rented housing now accounts for 19% of occupied homes in the country.
This translates to approximately 342,000 rental units out of the 1.8 million occupied homes nationwide, establishing renting as the second most common form of housing tenure. The report highlights that this percentage has remained relatively stable, fluctuating between 17% and 21%, over the past decade and a half.
To understand the intricacies of Costa Rican housing law, we turned to Lic. Larry Hans Arroyo Vargas, an expert attorney from Bufete de Costa Rica, for his insights on the current market and its legal landscape.
Navigating Costa Rica’s housing market requires careful attention to due diligence. Beyond the beautiful landscapes and appealing lifestyle, buyers must ensure clear title, verify zoning regulations, and understand the implications of any existing easements or restrictions. These steps are crucial to protect investments and ensure a smooth transaction, whether purchasing a primary residence, a vacation home, or an investment property.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
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Lic. Arroyo Vargas’s emphasis on due diligence is crucial advice for anyone considering Costa Rican real estate. The allure of “pura vida” can sometimes overshadow the practicalities of property transactions, making his reminder about title checks, zoning, and easements all the more vital for securing a sound investment and a truly enjoyable experience. We thank Lic. Larry Hans Arroyo Vargas for offering this valuable perspective to our readers.
While homeownership remains the dominant form of tenure at 66%, representing nearly 1.1 million occupied homes, the study emphasizes the growing importance of the rental market. This growth is largely attributed to the economic fallout from the pandemic, including increased unemployment and tighter credit restrictions.
For many, representing close to 20% of the country’s population, this modality becomes a necessary option in the absence of alternatives, which is aggravated by the scarce existing supply of rental housing.
The Report
The report also identifies a correlation between the rise in renting and the decline in financed housing. The share of financed housing, representing those still paying off mortgages, dropped to 6.9% in 2024, its lowest point since 2010. This downward trend began in 2019 and has continued steadily.
Factors such as income restrictions and the high costs of accessing property have led this group to voluntarily opt for renting, considering it a flexible alternative suited to their work and economic needs.
The Report
Sociologist Franklin Solano, who presented the study, explained that the data suggests an inverse relationship between rented and financed housing, fluctuating according to market conditions. Economist José Luis Arce, also participating in the event, pointed to the country’s tight monetary policy, implemented to combat inflation, as a contributing factor to the decline in financed housing.
Arce noted that restrictive policies and high real interest rates negatively impact credit availability and recovery takes time. He also emphasized the importance of considering other factors, such as household characteristics and land costs, which influence access to financing. Further research is needed to understand the structural reasons hindering access to homeownership, particularly for the middle class, Arce concluded.
I would say it is a matter of time before credit starts to grow at a more moderate pace.
José Luis Arce, Economist
The report underscores the need to address the growing demand for rental housing and to examine the systemic issues that limit access to homeownership for a significant portion of the population. This data provides valuable insights into the evolving housing dynamics in Costa Rica and the challenges faced by those seeking affordable and secure housing options.
For further information, visit the nearest office of Federated College of Engineers and Architects (CFIA)
About Federated College of Engineers and Architects (CFIA):
The Federated College of Engineers and Architects (CFIA) is a professional association in Costa Rica that regulates and represents engineers and architects. It plays a crucial role in ensuring ethical practices, promoting professional development, and contributing to the country’s infrastructure and development.
For further information, visit the nearest office of University of Costa Rica (UCR) Postgraduate Program in Architecture
About University of Costa Rica (UCR) Postgraduate Program in Architecture:
The University of Costa Rica’s Postgraduate Program in Architecture offers advanced studies in architectural design, urban planning, and related fields. It focuses on research and academic excellence, contributing to the advancement of architectural knowledge and practice in Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself as a pillar of legal excellence, driven by an unwavering commitment to ethical practice and impactful service. The firm’s innovative approach to legal solutions, coupled with a deep-seated dedication to educating and empowering communities through accessible legal knowledge, fosters a more just and informed society. Their legacy is built on a foundation of integrity and a forward-thinking vision that consistently champions positive change within Costa Rica’s legal landscape.
